| Events During the Period | NOTE 3 – EVENTS DURING THE PERIOD
A Common stock and Warrants Issued for cash
1. During the period, the Company received $117,640 through a placement of 904,924 common stock units to four investors for the offering price of $0.13 per unit. Each unit consisted of one share of common stock and two (one “G” and one “H”) warrants to purchase one share of common stock. The 904,924 “G” warrants are exercisable at $0.25 and expire two years from the date of issuance. The 904,924 “H” warrants are exercisable at $0.40 and expire three years from the date of issuance. Such warrants were classified within stockholders’ equity.
2. During the period, the Company received $100,000 through a placement of 588,237 common stock units to three investors for the offering price of $0.17 per unit. Each unit consisted of one share of common stock and one “H” warrant to purchase one share of common stock. The 588,237 “H” warrants are exercisable at $0.40 and expire three years from the date of issuance. Such warrants were classified within stockholders’ equity
3. During the period, the Company received $130,000 through a placement of 520,000 common stock units to five investors for the offering price of $0.25 per unit. Each unit consisted of one share of common stock and one “I” warrant to purchase one share of common stock. The 520,000 “I” warrants are exercisable at $0.50 and expire two years from the date of issuance. Such warrants were classified within stockholders’ equity.
4. During the period, the Company received $883,624 through a placement of 1,767,250 common stock units to twenty investors for the offering price of $0.50 per unit. Each unit consisted of one share of common stock and one “K” warrant to purchase one share of common stock. The 1,767,250 “K” warrants are exercisable at $1.00 and expire eighteen months from the date of issuance. Such warrants were classified within stockholders’ equity.
5. During the period, the Company received $436,260 through a placement of 623,227 common stock units to eleven investors for the offering price of $0.70 per unit. Each unit consisted of one share of common stock and one “K” warrant to purchase one share of common stock. The 1,734,000 “K” warrants are exercisable at $1.00 and expire eighteen months from the date of issuance. Such warrants were classified within stockholders’ equity.
B. Stock-based compensation
1. During the period, the Company issued 300,000 fully vested shares of the Company common stock and 400,000 warrants (200,000 “G” warrants with exercise price of $0.25 and 200,000 “H” warrants with exercise price of $0.40) for the purchase of one share each of common stock to a consultant as payment for services. As the equity instruments issued are fully vested and non-forfeitable, the fair value of the grant was recognized as an increase to stockholders’ equity at the measurement date with an offsetting amount as a deduction from stockholders’ equity within the caption “Services receivable”. This amount will be recognized as consulting expense over the terms of the agreements. The shares were valued at the closing price as of the date of the agreements ($0.67) and resulted in current recognition as at June 30, 2017, of $83,704 in consulting services expense and $117,296 as future services receivable. This amount will be recognized as consulting expense over the terms of the agreement. The warrants were valued using the Black-Scholes-Merton pricing model to estimate the fair value as at June 30, 2017, of $153,963 and resulted in current recognition of $71,287 in additional consulting services expense and $82,676 as additional future services receivable. This amount will be recognized as consulting expense over the terms of the agreement. The Black-Sholes-Merton pricing model assumptions used are as follows: expected dividend yield of 0%; risk-free interest rate of 0.10%-.0.11%; expected volatility of 282%, and warrant exercise period based upon the stated terms. See also C1 below.
2. Under the Bear Creek Corporate Advisory Consulting agreement executed in November of 2016, the Company became obligated to issue 100,000 additional shares to Bear Creek as of February 28, 2017. The shares were valued at $262,000 and were issued during April 2017.
3. During the period, the Company issued 350,000 “E” warrants that are exercisable at $0.25 and expire two years from the date of issuance to purchase one share each of the Company’s common stock to two unrelated parties as payment for services. The aggregate fair value of the warrants was $133,210. As the equity instruments issued are fully vested and non-forfeitable, the fair value of the grant was recognized as an increase to stockholders’ equity at the measurement date with an offsetting amount as a deduction from stockholders’ equity within the caption “Services receivable”. This amount will be recognized as consulting expense over the terms of the agreements. The Company recognized $61,678 in current expense and $71,532 remains as services receivable as of June 30, 2017. The Company used the Black-Scholes-Merton
pricing model to estimate the fair value. The Black-Sholes-Merton pricing model assumptions used are as follows: expected dividend
yield of 0%; risk-free interest rate of 0.10%-.0.11%; expected volatility of 282%, and warrant exercise period based upon the stated
terms.
4. During the period, the Company issued 450,000 fully vested shares of common stock to consultants as payment for services. The shares were valued at the closing price as of the date of the agreements ($0.73) and resulted in current recognition of $46,800 in consulting services expense and $281,700 as future services receivable. This amount will be recognized as consulting expense over the term of the agreement. The aggregate fair value of the warrants was $328,500. As the equity instruments issued are fully vested and non-forfeitable, the fair value of the grant was recognized as an increase to stockholders’ equity at the measurement date with an offsetting amount as a deduction from stockholders’ equity within the caption “Services receivable”. The Company used the Black-Scholes-Merton
pricing model to estimate the fair value. The Black-Sholes-Merton pricing model assumptions used are as follows: expected dividend
yield of 0%; risk-free interest rate of 0.10%-0.11%; expected volatility of 282%, and warrant exercise period based upon the stated
terms.
5. During the period, the Company issued 416,127 fully vested shares of common stock to a consultant as payment for services. The shares were valued at the closing price as of the date of the agreements ($0.89) and resulted in current recognition of $73,056 in consulting services expense and $297,297 as future services receivable. This amount will be recognized as consulting expense over the term of the agreement.
6. During the period, the engagement of the Subsidiary’s CEO was terminated and the CFO resigned. These actions triggered the forfeiture of 10,456,094 options previously granted under the 2016 Employee Incentive Plan. The forfeitures resulted in the de-recognition of $645,434 of previously recognized compensation expense related to the pre-vested forfeitures. The following tables present
a summary of the status of the grants to employees, officers and directors as of June 30, 2017.
Options outstanding at December 31, 2016 35,050,000 $ 0.051
Forfeited (10,456,094 ) $ 0.050
Options outstanding at June 30, 2017 24,593,906 $ 0.051
Options exercisable at June 30, 2017 12,423,406 $ 0.051 As such award was subject
to a clawback feature in certain contingent events such as termination for cause, the Company accounted for the cancellation of
the award in accordance with the provisions of ASC Topic 718-10-55. Thus, the Company recognized the original compensation cost
related to that grant (which was determined to be less than the current fair value of such award) as a credit to income statement
within line item “General and administrative”.
C. Exercise of Warrants
1. During the period, the consultant mentioned in Note 3B1 above, exercised their 400,000 warrants and acquired 334,450 shares of common stock. In accordance with the original terms of the warrant agreement the exercise of the warrants was made on a net share settlement basis and resulted in delivery to the Company of 65,550 shares by the consultant for the exercise price, based on the average market value of the common shares ten days period preceding the date of exercise.
2. During the period, the Company received $77,083 in cash for the exercise of 308,334 warrants to purchase 308,334 shares of common stock. The warrants carried an exercise price of $0.25.
3. During the period, the consultant mentioned in Note 8C1E of the consolidated financial statements as at December 31, 2016,
D. Medmar Settlement Further
to Note 6 of the consolidated financial statements as at December 31, 2016, OWC received $50,000 from Medmar LLC (“Medmar”)
during February 2017. On April 21, 2017, OWC served written notice to Medmar of OWC’s determination to prepay the non-recourse
loan by Medmar to OWC in the principal amount of $300,000. OWC has elected to exercise what it believes is its absolute right
to terminate certain distribution rights granted to Medmar under the loan agreement and has repaid the entire principal balance
of $300,000, during the period. |
